A Glimpse of Banking sectorPhase-1Early phase from 1786 to 1969 of Indian BanksPhase-2 Nationalization of Indian Banks and up to 1991 priorto Indian banking sector ReformsPhase-3New phase of Indian Banking System with the adventof Indian Financial & Banking Sector Reforms after1991
Phase-1GENERAL BANK OF INDIA 1786(FIRST BANK) RESERVE BANK OF INDIA 1935Slow growth and periodic failureTHE BANKING COMPANYACT 1949People mostly save in postal deposits.
Phase-2Nationalization of imperial bank of India andformation of sate bank of India(1955)Nationalization of SBI and Subsidiaries(1960)Insurance cover extended to depositsCreation of credit guarantee corporationCreation of regional rural banks
Phase-3Entry of Foreign BanksPhone Banking and Net-BankingShelter from external macroeconomic shockSystem become more convenient and swift
WHAT IS BANK? A banker or bank is a financial institution whose primaryactivity is to act as a payment agent for customers and to borrowand lend money. An institution where one can place and borrow money and takecare of financial affairs; A branch office of such an institution. The first modern bank was founded in Italy in Genoa in1406, its name was (Bank of St. George).
FUNCTIONS OF BANKSAccepting Deposits from public/others (Deposits).Lending money to public (Loans).Transferring money from one place to another (Remittances).Acting as trustees.Keeping valuables in safe custody.Government business.
Public sector BanksSome Public Sector Banks in India:Central Bank of IndiaCorporation BankDena BankBank of IndiaIndian Overseas BankOriental Bank of CommercePunjab & Sind Bank
Private sectors BanksNew generation private banks ICICI Bank• IDBI Bank• Axis bankForeign banks operating in India• HSBC BANK• CITI BANK• ABN-AMRO BANK• STANDARD CHARTED BANK
CO-OPERATIVE BANKSThe Co operative banks in India started functioning almost 100years ago.The Cooperative bank is an important constituent of the IndianFinancial System.They are setup to provide easy loans to farmersor other persons to set up his buisness.They are non profitable banks.Cooperative banks in India finance rural areas under:FarmingMilkPersonal financeSome example of co-operative banks in India-IDBI BANK(INDUSTRIAL DEVELOPMENT BANK OF INDIA)IFCI BANK(INDUSTRIAL FINANCE COOPERATION OFINDIA)APEX BANK
InstitutionsThese banks are mainly used for devoloping industries andcountriesSome Examples-Federal BankHDFC BankHSBCICICIBank Indian Overseas BankING Vysya Bank
The Reserve Bank of IndiaHistory:- Become operational on April 1,1935 Nationalized in the Year 1949.Major objectives:- Regulate the issue of banknote. Maintain reserves with a view to securing monetary stability. To operate the credit and currency system of the country to itsadvantage.
Functions of RBIThe fuctions are classified into three heads:-Traditional functions Promotional functionsSupervisory functions
Traditional functionsMonopoly of currency notes issueBanker to the Government (both the central and state)Fight against economic crisis and ensures stability ofIndian economy.Controller of ForEx and creditMaintaining the external value of domestic currency
Promotional functionsExtension of the facilities for the small scale industriesInnovating the new banking business transactions.Extension of the facilities for the provision of theagricultural credit through NABARD
Supervisory functionsGranting licence to Banks.Periodical review of the work of the commercial banks.Control the non-banking finance corporation.
HOW IT CONTROLS BANK &ECONOMYTOOLS:- CRR( CASH RESERVE RATIO): 5.5% REPO RATES(RR):7.5% REVERSE REPO RATE(RRR): 6.0% STATUTORY LIQUIDTY RATIO (SLR):24% BANK RATE: 6.0%